Key Takeaways
- President Donald Trump promised to “end inflation” and “immediately bring prices down” during his election campaign, but that hasn’t happened yet.
- Some forecasters expect inflation to fade to pre-pandemic levels of around 2% by the end of the year, though outright price decreases aren’t in the cards.
- The inflation outlook is unpredictable because Trump’s proposed tariffs could push up the cost of living significantly.
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The public is showing signs of impatience for President Donald Trump to fulfill his campaign promises to solve inflation, but it might be on its way down all on its own.
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A CNN poll last week showed 62% of U.S. adults believe President Donald Trump has not gone far enough to reduce the price of everyday goods. Inflation heated up unexpectedly in January, rising to a 3% year-over-year increase (compared to around 2% a year before the pandemic).
Trump, who won in the November elections on a wave of voter anger about inflation, pledged to “immediately bring prices down” and “end inflation” on day one of his presidency.
Inflation May Fall On Its Own
While the cost of living is still high, forecasters have a few reasons to believe that inflation is on course to gradually fade without much help this year.
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For one thing, January’s figures may have been partly a quirk of seasonally adjusted data. For another, housing costs, the biggest driver of inflation, have been rising less severely than in the recent past.
The Congressional Budget Office projects that inflation, measured by Personal Consumption Expenditures, will fall to 2.2% in 2025 down from 2.5% the year before. The federal agency foresees inflation reaching the Federal Reserve’s goal of 2% by 2027. Forecasters at The Conference Board, an economic think tank, predict inflation will fade to 2% by the end of the year.
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But Trump Could Impede The Process
Those projections come with at least one major caveat: the Conference Board noted that “the unpredictability of the current administration’s policies looms large over the outlook.”
Trump has kept forecasters and financial markets guessing about his economic playbook, especially whether he will impose the heavy tariffs he has said he would on U.S. trading partners. Many economists believe those tariffs would increase inflation as merchants passed price increases on to consumers.
